THE REPUBLIC OF UGANDA,

IN THE HIGH COURT OF UGANDA AT KAMPALA

(COMMERCIAL DIVISION)

MISC APPLN NO 401 OF 2014

(ARISING FROM HCCS NO 159 OF 2012)

CANSTER RAGS (U) LTD}...................................................APPLICANT/PLAINTIIFF

VS

STANBIC BANK (U) LTD}.............................................RESPONDENT/DEFENDANT

1. BAHABUR KARMALI}
2. RIYAZ MITHANI}...............................................................THIRD PARTIES

BEFORE HON. MR. JUSTICE CHRISTOPHER MADRAMA IZAMA

RULING

The Applicant filed this application under the provisions of Order 9 rule 18 of the Civil Procedure Rules for orders that the court order dated 8th of May 2014 dismissing the main suit is set aside and the suit reinstated and fixed for hearing and secondly for the costs of the application to be in the cause.

The grounds of the application set out in the Notice of Motion are that the non-compliance with the scheduling directions was not the fault of the Applicant but rather a genuine and unfortunate mistake of the Applicant’s Counsel which should not be visited on an innocent litigant in the circumstances of the case. Secondly that the scheduling directions were supposed to be followed by all parties and scheduling would be inter partes as court had directed therefore the blame is not entirely on the Plaintiff alone. Thirdly that the sums of money involved in this suit are colossal for the court not to grant the Applicant another chance to be heard since the hearing had not yet taken place. Finally that it would be in the interest of justice and fair that the suit is reinstated and determined on its merits. The application is supported by the affidavit of Friday Robert Kagoro an advocate of the High Court duly instructed to represent the Applicant. He deposes that the Applicants suit is for a refund of more than Uganda shillings 40,000,000,000/= allegedly occasioned by the first Respondent bank when it allowed itself to be used by one Riyaz Mithani, the second third party to open an unauthorised bank account from where the money was siphoned off. The Applicant is interested and has always been interested in having the suit determined. Upon perusal of the court record he disposes that at the hearing of 26 March 2014 all the parties were in court and directions were given for the parties to meet on 14 April 2014 to agree on a joint scheduling memorandum which was not done by either of the parties. On the information of Counsel Roscoe Yiga, Counsel prosecuting the case, he genuinely forgot the record on 14 April 2014 and 8th of May 2014 in his diary but rather called the Defendant’s Counsel Mr John Fisher Kanyemibwa on the 5th of May 2014 to reschedule the meeting for the 8th of May 2014. The said Counsels thought that the hearing had been fixed for the 19th of May 2014.

He was not informed by Counsel John Fisher Kanyemibwa when the suit was dismissed on the 8th of May 2014 when he had called him to apologise for not being in a position to meet him and others that very day. Lastly on the 19th of May 2014 when Roscoe Yiga reached the court he consulted the court clerk about the case coming up but was informed that it had been fixed for the 8th of May 2014 and had been dismissed in his absence. He was only able to obtain the order dismissing the suit on the 22^nd of May 2014. The Applicant’s lawyers have always been ready to comply with the scheduling directions and have prepared a draft scheduling memorandum for that purpose. In the premises the deponent believes that there is a genuine and honest mistake on the part of the Applicant’s Counsel which should not be visited on a litigant who is interested in prosecuting the suit.

The affidavit in reply on behalf of the Defendant is deposed to by John Fisher Kanyemibwa. He deposes that he is the advocate charged with the responsibility of defending the suit and conversant with the facts prior to the dismissal of the suit on the 8th of May 2014. On 26 March 2014 at 11 AM this suit was mentioned before the court for pre-trial directions. He attended court and the Applicant was represented by Mr Mwesigye Wycliffe holding brief for Mr Roscoe Yiga Counsel for the Applicant/Plaintiff. The second third party was represented by Mr Michael Okecha while the first third-party was not represented although his defence to the third party claim was filed by Counsel for the Applicant/Plaintiff and subsequently Counsel withdrew from the conduct of his case.

Counsel for the Applicant informed the court that the first third-party who is a director of the Applicant and whose defence in this suit had been filed by Counsel for the Applicant was to be advised to appoint another advocate. The court issued conferencing/pre-trial directions and directed the parties to hold a meeting before the scheduling conference date to identify matters of agreement and disagreement with a view to coming up with a joint written scheduling memorandum to be filed in court prior to the conferencing date. It was agreed by Counsel for the parties before the court that the meeting would be held on 15 April 2014 at 2:30 PM at the Chambers of John Fisher Kanyemibwa who is a more senior member of the bar. The conferencing date was agreed to by consent of Counsel and fixed for the 8th of May 2014 at 9:30 AM. On 14 April 2014 Counsel John Fisher Kanyemibwa prepared to host the meeting outside court but only the Respondents legal manager Ms Sarah Nambasa turned up to participate in the meeting. Owing to the absence of the Applicant’s Counsel and the third parties the meeting did not take place.

About a week before the 8th of May 2014 John Fisher Kanyemibwa met Mr Roscoe Yiga on the ground floor of Crested Towers, and inquired from him why he did not turn up for the meeting in his Chambers on 14 April 2014. Roscoe Yiga informed John Fisher Kanyemibwa that he had not turned up because his client was not around. Because the meeting of Counsel did not take place, no scheduling memorandum was prepared and filed in court as directed by court on 26 March 2014. On the 8^th of May 2014 John Fisher Kanyemibwa attended court and reported the failure of Counsel to meet owing to failure by the Applicant’s Counsel to attend the meeting and hence the failure to file a joint scheduling memorandum as directed. The Applicant’s Counsel Mr Roscoe Yiga was not in court neither did he send any person to represent him in court. The court noted that the Plaintiff and its Counsel were absent from court and the Plaintiff did not comply with the scheduling directions. The matter went beyond the absence of the Applicant/Plaintiff and its Counsel and was accordingly dismissed for non-compliance with the directions of the commercial court judge coupled with failure by the Plaintiff and its Counsel to appear in court on the scheduled date.

Finally Counsel John Fisher Kanyemibwa deposes that the Applicant’s application is legally misconceived and ought to be dismissed. Secondly it is true that the Applicant/Plaintiff sued the Respondent/Defendant seeking compensation for alleged negligence in opening an account for the Applicant/Plaintiff. The Respondent denied the alleged negligence. It is not true that the Applicant/Plaintiff was interested in the hearing of this suit since none of the Applicant/Plaintiff’s directors attended court on 26 March 2014 when the suit was called for pre-trial scheduling directions and on the 8th of May 2014 when the suit was called for a scheduling conference. Furthermore every Friday afternoon the commercial court sends out electronically a cause list for the following week to Commercial Court practising advocates. The same cause list is published on the judiciary website. The Applicant’s Counsel ought to have ascertained from the cause list that the suit was fixed for the 8th of May 2014. The suit was not cause listed for the 19th of May 2014 and it is misleading for the Applicant’s Counsel to attend court for hearing on that date. Further on the draft scheduling memorandum and attached to the affidavit in support of the application ought to have been prepared by Counsel for the Applicant/Plaintiff for purposes of discussion as directed by the court on the 14th of “May” (meant April) 2014 between Counsels. No such scheduling notes were submitted to the Respondent’s Counsel prior to the dismissal of the suit. Furthermore it is not true that there was any honest mistake on the part of Counsel for the Applicant not attending the court directed meeting on the 14th of April (not May) 2014 and the scheduled court appearance on the 8th of May 2014. It is not in the interest of justice for the suit to be reinstated.

Where the court dismisses the suit for failure to comply with the directions of the commercial court judge, the remedy of reinstatement of the suit is not available to the Applicant. In the premises having failed to comply with the courts directions and having failed to attend court on the 8th of May 2014, it was not fair and just for the suit to be reinstated.

In further reply Seninde Saad, a Ugandan lawyer working with Messieurs Okecha Baranyanga and company advocates deposes that he is aware of the facts of the matter. He deposes that the plaint is frivolous as the account and the transactions on the Applicant paid in the first Respondent bank were authorised by the Applicant through its resolution signed by both and only directors in the Applicant. Secondly when the matter came up on 26 March 2014, it was in the presence of Mr Roscoe Yiga, Counsel for the Applicant when it was adjourned to the 8th of May 2014. Failure to record the correct date is negligent, not plausible and a lack of commitment to the proceedings and amounted to dilatory conduct which was not sufficient cause to grant the application. Secondly the advocates dilatory conduct can be imputed on his client as neither of them appeared in court. It was in the interest of justice that the application is denied as the Applicant through its Counsel was aware of the date of the proceedings but was absent in its matter. The grant of the application will render the appearance/proceeding and sitting of the Respondents and this honourable court on the 8th day of May 2014 respectively a waste of time. The second Respondent shall suffer irreparable injury if the application is granted.

In rejoinder Counsel Friday Kagoro Robert deposes in reply to the affidavit of Counsel John Fisher Kanyemibwa as well as that of Mr Seninde Saad.

As far as the affidavit of Seninde Saad is concerned he deposes that it is defective for being uncertain and does not disclose on whose behalf it is made. Upon perusal of the whole affidavit it cannot be concluded on whose behalf it is sworn. Secondly on the deposition that the second Respondent will suffer irreparable injury, the second Respondent is not Riyaz Mithani, the person represented by the firm which drafted the affidavit but Bahadur Karmali who is represented by the Applicant’s Counsel. The 8th of May 2014 was the first time Applicant’s Counsel did not attend court and this did not amount to dilatory conduct which can be imputed on the Applicant. The sitting of the court was not in vain because the absence of the Applicant was not intentional. There is no evidence of any irreparable damage that may be suffered by the first third-party.

In rejoinder to the affidavit of Mr John Fisher Kanyemibwa he deposes on the basis of information of Mr Roscoe Yiga that it is not true that one Mwesigye Wycliffe was on holding brief for him on 26 March 2014 because he attended court in person. Secondly the conferencing date was set by court and not by consent of Counsel. Counsel John Fisher Kanyemibwa who appeared for the meeting ought to have called the other lawyers to find out why they had not shown up. Secondly the chance meeting between Roscoe Yiga and Counsel John Fisher Kanyemibwa occurred in a shopping Mall (Capital Shoppers Ntinda) and occurred several weeks after the 8th of May 2014.

The suit was dismissed for failure to comply with scheduling directions and not for want of prosecution. The Applicant has always been interested in prosecuting the suit. Failure to attend by Counsel was an honest mistake on the part of the advocate. Secondly failure to read the cause list posted to advocates or the website can be imputed on the litigant. Finally in the remedy for reinstatement of the suit is available to the Applicant and all the parties did not comply with the directions of the court and not only the Applicant. In the premises it is in the interest of justice that the application is reinstated and the suit heard on merit.

Counsels addressed the court in written submissions which were filed while the court was between 14 July 2014 and 15th of August 2014 in vacation. The matter came for mention on 14 July 2014 and the parties were unable to proceed and therefore put in written submissions as scheduled.

On 14 July 2014 the direction of court was that the written submissions should be in the maximum of five pages each. Secondly any rejoinder would be restricted to 2 ½ pages. However the Applicant wrote eight pages in disregard of the courts direction to manage its time though the Respondent complied. Secondly the rejoinder of the Applicant comprises of seven pages instead of 2 ½ pages.

In support of the application, the Applicant’s Counsel relies on the facts in support of the application set out above to support the grounds for setting aside the dismissal of the Plaintiff’s suit. On the principle that an honest mistake of Counsel should not be used to penalise a litigant and that the oversight, mistakes or negligence of litigants Counsel should not be visited on him or her, Counsel relied on the case of Banco Arabe Espanol versus Bank of Uganda SCCA No 8 of 1997. In that case the Supreme Court held that a bona fide claim or defence of a litigant should not be permanently blocked from being tried on account of the default of his professional adviser. The principle was also applied in Cloud 10 Ltd versus Standard Chartered bank (Uganda) Ltd [1987] HCB 64 that errors of non-compliance with the rules of procedure were not fatal as no injustice would be done to the parties. Innocent litigants should not be penalised for the errors or oversights of their Counsel.

Secondly the suit was not dismissed for want of prosecution as alleged in the affidavit in reply by John Fisher Kanyemibwa. He reiterated the grounds in the affidavit in support that the scheduling directions issued by the court were supposed to be followed by all parties to the suit and none of the parties showed up. For the Respondent to escape liability it had to prove that its Counsel either called the lawyers involved in the matter which has four different parties or lawyers. There is no proof that any effort was made by Counsel John Fisher Kanyemibwa in whose office the meeting was supposed to be held to establish why other Counsels were not in attendance. In the absence of proof the blame cannot be thrown on the Plaintiff. According to the Applicant’s Counsel this suit was dismissed for failure by the Applicant but for failure to follow directions. Therefore in the circumstances it would be fair for the court to be pleased to reinstate the suit. The Applicant atoned for its mistake by preparing a draft scheduling memorandum which it has served on the other party. Furthermore it is not necessary for the draft scheduling memorandum to be generated by the Plaintiff because the law does not state that it should be generated by the Plaintiff/Applicant. It can be generated by either party. Furthermore Counsel Roscoe Yiga for the Applicant had suggested a new date for meeting with Counsel and this was mistakenly on the 8th of May 2014.

Secondly the Applicant is interested in prosecuting the case for loss of Uganda shillings 40,000,000,000/=. The Respondent further filed third-party proceedings against the third parties in case of any liability. This suit is not frivolous or vexatious considering the colossal sums involved and the court ought to hear the parties to investigate the facts and give a decision on the merits. To dismiss the case without affording the parties a hearing would allow the "guilty parties" (if any) to go free and amounts to a miscarriage of justice.

The affidavit of Seninde Saad ought to be struck out for being defective since there is no proof of who instructed him to depose to the affidavit. Secondly the affidavit cannot be said to have been deposed to on behalf of Mr Riyaz Mithani, a third Respondent.

As far as the merits are concerned there was no dilatory conduct on the part of the Plaintiff/Applicant and the Applicant never missed court but did so for the first time when the suit was dismissed. Reinstatement of the suit will not make the hearing that took place on the 8th of May 2014 a waste of time. The reinstatement of the suit will prevent a miscarriage of justice and is the Constitutional mandate of the court to administer justice.

In reply the Respondent’s Counsel submitted that the suit was dismissed under the provisions of rule 7 of the Constitution (Commercial Court) (Practice) Directions for failure to comply with the directions issued on 26 March 2014. The judge ordered Counsels for the parties to meet in the Chambers of Counsel for the Respondent for a pre-scheduling meeting on 14 April 2013 at 2:30 PM and to generate a joint scheduling memorandum which was to be filed prior to the 8th of May 2014 when the case was coming for a scheduling conference.

The rule provides that failure by a party to comply in a timely manner with any order made by the commercial judge in a commercial action shall entitle the judge, at his or her own instance to dismiss the action or to award costs as the judge thinks fit. The fact is that the court issued directions and Counsel for the Applicant did not turn up and as a result of failure to hold the meeting between Counsels no joint scheduling memorandum was filed in court by the 8th of May 2014. The Applicant now seeks to set aside the dismissal order and have the suit reinstated under Order 9 rule 18 of the Civil Procedure Rules.

It is the Respondent's case that the application is incompetent because Order 9 rule 18 of the Civil Procedure Rules provides for setting aside the dismissal order where the suit had been dismissed under Order 9 rule 17 of the Civil Procedure Rules, where a suit has been dismissed for non-appearance by all the parties. In this case the dismissal order was pronounced in court in the presence of Counsel for the Respondent and the 2nd third-party. It was not dismissed for non-attendance by all the parties or any of them as implied by the application under Order 9 rule 18 of the Civil Procedure Rules.

The Constitution (Commercial Court) (Practice) Directions have no provision for setting aside the dismissal order made under rule 7. Furthermore there is no provision in the said direction that any provisions of the Civil Procedure Rules or Order 9 rule 18 can be invoked for the said purpose.

Counsel further submitted that from the wording of rule 5 (1) of the said Directions, in as far as the Civil Procedure Rules does not provide for dismissal of the suit for want of compliance with the judges directions, rule 7 of the said Directions stands alone. The provisions of the Civil Procedure Rules are irrelevant to an order of dismissal of the suit for want of compliance with the courts directions. Counsel contends that the framers of the directions were alive to the remedies under the Civil Procedure Rules for reinstatement of the dismissed suits but no similar remedy was provided for in the said directions for orders issued under rule 7 thereof. A dismissal for non-compliance with the judge’s directions was clearly intended not to be set aside.

Without prejudice the Respondent’s Counsel submitted that in the unlikely event that the court holds that the application for setting aside the dismissal order is properly before court, the application lacks merit and ought to be dismissed on its merits. This is because the Applicant’s Counsel claims that he did not turn up for the court directed meeting on 14 April 2014 because he allegedly did not record the dates in his diary. No attempt was made to exhibit Diary or its relevant pages to prove his claim. On that basis the claim was not substantiated.

Secondly the Respondent’s Counsel submitted that it is not true that the failure by the Applicant to appear in court was a result of a mistake as alleged by the Applicant. The reason for the non-attendance of the said meeting by Counsel for the Applicant was that his client was not around as averred in paragraph 13 and 26 of the affidavit of Counsel John Fisher Kanyemibwa. Court will note that Counsel for the Applicant is also on record as having filed pleadings for the first third-party, a director of the Applicant. In his affidavit in rejoinder Counsel for the Applicant did not dispute the correctness of the said averments in the affidavit in reply. Counsel for the Applicant only disputed the place where the said information was given to Counsel for the Respondent but not the fact of giving the said information. On the 8th of May 2014 Counsel for the Respondent informed the court about the same reason for non-attendance of the meeting by Counsel for the Applicant. Counsel for the Applicant is not disputing the record. Secondly he is aware of the contents of the court record according to paragraph 5 of the affidavit in support of the application.

The submission that the Applicant was penalised for non-compliance with the courts directions when the Respondent likewise did not comply is not correct. The Respondent’s Counsel was present at the meeting venue ordered by the court as disclosed by paragraph 10 of the affidavit of John Fisher Kanyemibwa. Since the Applicant’s Counsel never turned up for the meeting, the submission that Counsel for the Respondent did not comply with the scheduling directions ought to be rejected by the court.

The Respondent’s Counsel further submitted that the fact that this suit involves a substantial claim is not important to the Applicant. Otherwise the Applicant and its Counsel would have been very keen in complying with the courts directions. Belatedly generating scheduling notes which ought to have been considered at the scheduled meeting and having a draft scheduling memorandum prepared is not helpful. Furthermore, there is no affidavit on record by any director of the Applicant alleging negligence against their Counsel. The absence of such an affidavit demonstrates that the Applicant is not at all bothered by the dismissal order. Otherwise the Applicant ought to have put such an affidavit on record to demonstrate its interest in the dismissed suit. The authorities cited for the Applicant are not helpful to the application which ought to be dismissed with costs to the Respondent.

In further opposition to the application for reinstatement of the suit Counsel for the second third party after making reference to the facts which are disclosed by the pleadings and affidavit in support submitted that the application is instituted under Order 9 rule 18 of the Civil Procedure Rules. The rule permits the Plaintiff to apply for an order to set aside the dismissal only if the suit was dismissed under rule 16 or 17 of Order 9 of the CPR. He submitted that the institution of the application under the above rule was fatally wrong and application ought to be dismissed with costs.

Without prejudice Counsel for the second third party submitted that it is imperative to note that on 26 March 2014 Counsel for the Applicant was in court and well aware that the parties had to meet on 14 April 2014 at the Chambers of the Respondent’s Counsel to prepare a joint scheduling memorandum for filing before 8th of May 2014. Irrespective of this knowledge neither the Applicant nor his Counsel appeared for the meeting or the scheduling conference. They did not give explanation for their inability to appear both for the meeting and the scheduling conference in court.

Regarding the submission that there was mistake of Counsel which should not be visited on a litigant according to the case of Banco Arabe Espanol versus Bank of Uganda SCCA No 8 of 1987, failure for the Applicant’s Counsel to record the dates on which a case involving colossal sums of money was coming up for conferencing and scheduling was not only grossly negligent but inept and should be visited on the Applicant who had on several occasions not appeared in court.

Secondly rule 5 (2) of the Constitution (Commercial Court) (Practice) Directions provides that the procedure in and progress of the commercial action shall be under the direct control of the commercial judge who will, to the extent possible, be proactive. From the above premises the judge ordered the parties to meet in the Chambers of the Respondent’s Counsel that the Applicant defied the court order and as such of the directions empower the court to refuse to extend any further period of compliance with an order of the court for costs or to dismiss the action or counterclaim in whole or in part. Furthermore Order 6 rule 22 of the Civil Procedure Rules permits the court where the Defendant appears and the Plaintiff does not appear to dismiss the suit unless the Defendant admits the claim or part of it. The court consequently properly dismissed the suit both for nonappearance of the Applicant/Plaintiff and its Counsel and non-compliance with a court order. The court was justified in dismissing the Applicant’s suit for defiance of the court order. Dismissal because the court order is not complied with is not a mere technicality which can be ignored in terms of article 126 (2) (e) of the Constitution of the Republic of Uganda because it contains the fundamental rule that an order must be obeyed unless set aside or varied. This was held in Amrit Goyal versus Harichand Goyal and three others Civil Application No 109 of 2004 [2008] UGCA 6 being the judgment of the Court of Appeal. They held that a court order must be obeyed as ordered unless set aside or varied and that it is not a mere technicality that can be ignored. Those who ignore a court order choose to do so at their own peril.

Furthermore the submission that the other parties to the suit did not attend to the Chambers of Counsel for the Respondent and that the Applicant should not be penalised is untenable because the absence of the Applicant/Plaintiff was the reason for failure to file a joint scheduling memorandum as directed by the court. The Applicant’s belated scheduling notes do not salvage anything as the Applicant already disobeyed the court order and lacks the audience of this court in relation to this matter. Lastly the fact that the suit involves a colossal sum is immaterial. Counsel submitted that otherwise the Applicant and its Counsel should have been vigilant in complying with the court's directions. Nonappearance of the Applicant while the suit was proceeding leaves only one inference of fact that the Applicant is not interested in the suit and the application should be dismissed with costs to the second third party.

In rejoinder the Applicant’s Counsel submitted that it is conceded by the Respondent and the second third party that the court made the directions in the presence of Counsel for the Applicant on 26 March 2014. Neither the Respondent nor third-party has cited any other court scheduled date when the Applicant was not present in court through its lawyers. It is established that the Applicant’s Counsel was not present only on the 8^th of May 2014. This supports the Applicant submission that there was an honest mistake of Applicant’s Counsel which ought not to be visited on the Applicant. Counsel further relied on the Supreme Court judgment in Julius Rwabinumi versus Hope Bahimbisonumi SCCA No. 14/2009 (case not attached and unavailable for perusal) that an Applicant should not be denied the right to sue for his rights simply because of the blunder of his lawyers when it is settled that an error of his Counsel should not be visited on his client. Both the Respondent and the second Party are in agreement that the Applicant did not turn up for the meeting scheduled on 14 April 2014 in the office of the Respondents Counsel. There is no evidence from which this court can draw any single conclusion that the Respondent’s Counsel organised the meeting and that the rest of the other parties did not turn up. It appears to be a convenient cover up at this stage for not accepting that none of the parties followed the honourable judges scheduling directives to the dot.

Counsel for the second third party did not himself attend the meeting in the Respondent’s office. The suit was dismissed for failure to follow the court’s directives and there was no party who can be apportioned the blame. The directions were meant for all the parties and the second Respondent should not at this stage argue anything to put the whole blame on the Applicant.

Furthermore the Constitution (Commercial Court) (Practice) Directions was not meant to wipe out the rules of procedure of the High Court. Indeed the rule 5 (1) clearly stipulates that the ordinary rules of the High Court will apply to all commercial matters. There is nothing in the rules quoted that says that where the judge has powers to dismiss the action or claim at his or her own instance, he does not have powers to extend the period of compliance or to reinstate the dismissed suit. Where the rules are silent on the procedure for reinstatement, it would be prudent for this court to follow the High Court rules. After all one of the arguments raised by the Respondent is that the Applicant was not in court on the day the matter was called for hearing. Moreover under section 98 of the Civil Procedure Act and section 33 of the Judicature Act, the High Court has unlimited jurisdiction to grant remedies as any of the parties to a matter is entitled to so that as far as possible all matters in controversy between the parties are completely and effectually determined.

If the court took the argument by both the Respondent and the third-party then it will run contrary to the principle of justice enshrined in article 126 (2) (e) of the Constitution of the Republic of Uganda that justice should be administered without undue regard to technicalities. If the court were to give a very strict interpretation of the Constitution (Commercial Court) (Practice) Directions, most litigants would be locked out from seeking Justice at the slightest bona fide mistake of the Counsel who did not follow the practice directions of the judge. In light of the fact that none of the parties complied with the scheduling directions it would be in the interest of justice that the court allows this application. The judge has inherent powers and at the instance of the judge to extend the time within which to comply with the directions.

Lastly the affidavit of Saad Seninde is defective as it offends Order 3 rule 1 of the Civil Procedure Rules because it has failed to show on whose behalf it was made and in what capacity. Such an affidavit was struck out in the case of Mugoya Construction versus Central Electricals Ltd HCMA a 699 of 2011 which was cited with approval by his Lordship Justice Geoffrey Kiryabwire in Messieurs Simon Tendo Kabenge Advocates versus Mineral Access Systems (U) Ltd HCMA 565 of 2011. This is because the deponent cannot claim to be deposing to the affidavit on the behalf of the second third party without authority. In those circumstances the second party can only be taken to have conceded to the averments in the affidavit of the Applicant and the court should find as such.

On the question of the chronology of events and the events which are relevant Counsel reiterated submissions on this point. Regarding the colossal sums involved, courts have been alive to the fact and have always in the interest of justice allowed the reinstatement of a suit on this ground. In the Kenyan case of Commissioner for Income Tax versus Kencell Communications Civil Appeal No 84 of 2007, it was held inter alia that the dispute involved a colossal sum of money and that shutting the doors of justice to the appellant and condemning it unheard would deny it the fundamental right of being heard.

It was argued that the third parties defence was drawn by the Applicant. It is also true that the Applicant lawyer’s withdrawal from representing the first third-party and the record is very clear and the court was duly informed about this. In the circumstances the Applicant’s Counsel prays that there is sufficient reason to reinstate the suit in the interest of justice and investigate the matters to its conclusion.

Ruling

I have duly considered the Applicant’s application containing the facts which are sufficiently reproduced at the beginning of this ruling. Furthermore I have duly considered the written submissions of Counsel and authorities cited which submissions are also set out above.

I will start with the point of law as to whether a dismissal by a commercial court judge of a suit under rule 7 of the Constitution (Commercial Court) (Practice) Directions can be set aside and/or reinstated. The Constitution (Commercial Court) (Practice) Directions rule 7 thereof provides as follows:

“7. Noncompliance of parties

Failure by a party to comply in a timely manner with any order made by the commercial judge in a commercial action shall entitle the judge, at his or her own instance, to refuse to extend any period of compliance with an order of the court or to dismiss the action or counterclaim, in whole or in part, or to award costs as the judge thinks fit.”

As far as the rules of procedure are concerned rule 5 (1) and (2) of The Constitution (Commercial Court) (Practice) Directions provides that:

            "5. Procedure and practice of the commercial court

(1) The ordinary rules of the High Court will apply to all commercial actions, subject to the clarifications set forth in this Practice Direction.

(2) The procedure in and progress of a commercial action shall be under the direct control of the commercial judge who will, to the extent possible, be proactive.”

The Respondent’s Counsel argued that a decision dismissing a suit under rule 7 of the Constitution (Commercial Court) (Practice) Directions cannot be reinstated by an application filed under Order 9 rule 18 of the Civil Procedure Rules. The rule applies to suits dismissed under the preceding rules 16 or 17. Rule 16 provides that where on the date fixed for filing a defence or to appear and answer, it is found that the summons has not been served upon the Defendant in consequence of the failure of the Plaintiff to pay the court fees or charges, if any, for the service, the court may make an order that the suit be dismissed. Secondly rule 17 provides that where neither party appears when the suit is called on for hearing, the court may make an order that the suit be dismissed.

I agree with the Respondent’s Counsel to the extent that Order 9 rule 18 of the Civil Procedure Rules provides for the filing of a fresh suit or applying to reinstate the suit by setting aside the dismissal where the suit has been dismissed under the provisions of Order 9 rules 16 or 17 of the Civil Procedure Rules. Citing the wrong law is however not a ground for the dismissal of an action provided that the irregularity does not go to the jurisdiction of the court and has not occasioned injustice to the other side. In the case of Boyes vs. Gathure [1969] 1 EA 385 proceedings are commenced by chamber summons which is an interlocutory application form and not by originating summons and objection was taken to the procedure. Sir Charles Newbold P held at page 389:

“Did this erroneous procedure result in the whole proceedings being a nullity as is urged by Mr. da Gama Rose? In my view the concept of treating something which has been done and acted upon as a nullity is a concept which should be used with the greatest caution. May I repeat some words I used in Nanjibhai Prabhudas & Co. Ltd. v. The Standard Bank Ltd., [1968] E.A. 670. I said in that case (at p. 683 B):

“The courts should not treat any incorrect act as a nullity, with the consequence that everything founded thereon is itself a nullity, unless the incorrect act is of a most fundamental nature. Matters of procedure are not normally of a fundamental nature.”

Using an incorrect form of procedure which has, in fact, brought the parties before the court and has, in fact, enabled the parties to present their respective cases to the court is not an incorrect act of such a fundamental nature that it should be treated as if it, and everything consequent upon it, did not exist and never had existed.”

This decision was cited with approval by the Ugandan Court of Appeal in Saggu v Roadmaster Cycles (U) Ltd [2002] 1 EA 258  where Mpagi-Bahigeine JA at page 262 held that citation of a wrong rule was not fatal if it did not go to the jurisdiction of the Court. She said:

“Regarding the second point in objection that the notice of motion did not cite the law under which it was being brought. The general rule is that where an application omits to cite any law at all or cites the wrong law, but the jurisdiction to grant the order sought exists, then the irregularity or omission can be ignored and the correct law inserted. In Nanjibhi Prabhudas and Company Limited v Standard Bank Limited [1968] EA it was held:

“The court should not treat any incorrect act as a nullity with the consequence that everything founded thereon is itself a nullity unless the incorrect act is of a most fundamental nature. Matters of procedure are not normally of a fundamental nature”.

The Supreme Court also emphasized in Re Christine Namatovu Tebajjukira [1992-93] HCB 85 thus:

“The administration of justice should normally require that the substance of disputes should be investigated and decided on their merits and that errors and lapses should not necessarily debar a litigant from the pursuit of his rights”.”

The using of incorrect procedure as with the citation of an incorrect rule of procedure is not fatal if it does not affect the jurisdiction of the court to hear the matter and no prejudice has been occasioned to the opposite side.

The powers of the court to reinstate a suit under its inherent powers was considered recently by this court in the case of SOBETRA (U) Ltd vs. West Nile Electrification Company Limited HCMA No 616 of 2014 arising from HCCS No 90 of 2010. In that decision the Applicant relied on the case of Rawal versus The Mombasa Hardware Ltd [1968] EA 392 decided by the East African Court of Appeal. The Appellant sued the Respondent in 1962 but no step was taken in the suit for over three years and the court on its own motion and without notice to the parties dismissed the suit under the Kenyan Order 16 rule 6 of the Civil Procedure (Revised) Rules 1948. This is the equivalent of Order 17 rule 6 (1) of the Civil Procedure Rules. The Appellant applied to have the order of dismissal set aside and the suit reinstated under the inherent powers of the court provided for by the equivalent of section 98 of the Civil Procedure Act (section 97 of the Kenyan Civil Procedure Act). The High Court dismissed the application on the ground that under section 97 of the Kenyan Civil Procedure Act, inherent jurisdiction had been excluded by Order 16 rule 6 (2) which provides that the Plaintiff may file a fresh suit after its suit is dismissed under Order 16 rule 6 (1) subject to the law of limitation. The Appellant appealed to the East African Court of Appeal. Law JA held that the inherent jurisdiction of the High Court was not excluded in the circumstances of the case and allowed the appeal and remitted application for reinstatement of the suit for hearing on the merits by the High Court. 0

The decision was quoted with approval by the East African Court of Appeal sitting in Kampala in Adonia v Mutekanga [1970] 1 EA 429 where Spry VP held at page 432:

“... There is no rule of law, as Mr. Kazzora implied, that inherent powers cannot be invoked where another remedy is available. The position, as I understand it, is that the courts will not normally exercise their inherent powers where a specific remedy is available and will rarely if ever do so where a specific remedy existed but, for some reason, such as limitation, is no longer available. The matter is, however, not one of jurisdiction. The High Court is a court of unlimited jurisdiction, except so far as it is limited by statute, and the fact that a specific procedure is provided by rule cannot operate to restrict the court’s jurisdiction, Rawal v. Mombasa Hardware Ltd [1968] E.A. 392.”

The High Court may invoke its inherent jurisdiction to set aside a dismissal in the interest of justice provided the incorrect procedure used does not go to jurisdiction and has not occasioned prejudice to the Respondent. The Respondent has had an opportunity to reply to the application on the merits and has indeed addressed the court on the merits. I will therefore consider the application on the merits.

As far as the merits are concerned a dismissal under rule 7 of the Constitution (Commercial Court) (Practice) Directions may or may not be a decision on the merits depending on the stage at which the proceedings had reached. Again this was considered by this court in the case of Andrew Babigumira vs. John Magezi HCMA No 538 of 2013 arising from HCCS No. 344 of 2013. In that case the suit had been dismissed under the provisions of rule 7 of the Constitution (Commercial Court) (Practice) Directions. The Applicant filed a fresh suit and objection was taken to the filing of a fresh suit on the ground that the matter was res judicata. The court considered the effect of a dismissal under rule 7 exhaustively and it suffices to reproduce my ruling in that matter which I will adopt for this application as it addresses the very same issue as in the current application as to whether a dismissal for non-compliance with the directions of a judge under rule 7 of the Constitution (Commercial Court) (Practice) Directions is on the merits. The ruling of the court in the previous matter is as follows:

“Both Counsels have not addressed the court as to whether a dismissal under the above quoted rule 7 is a dismissal on the merits. In my opinion it is not a dismissal on the merits of the action but a dismissal for non-compliance with a procedural step. However, it may also depend on the stage at which the suit is dismissed. At the pre-trial level, suits ought not to be dismissed on the merits. Rule 7 complements rule 6 which provide that at the discretion of the commercial court judge, a preliminary hearing may be held. Of particular relevance is rule 6 (4) which provide as follows:

"The court will seek to set realistic time limits for hearing. Once established, those time limits will be expected to be adhered to and extension will only be granted in special circumstances."

In other words rule 7 of the Constitution (Commercial Court) (Practice) Directions deals with non-compliance of the parties with time lines set by the judge. In this particular case the parties had been given timelines within which to meet and come up with a joint scheduling memorandum in compliance with Order 12 of the Civil Procedure Rules. However, the Plaintiff’s Counsel dragged the process and frustrated it because he had not yet been paid and was still negotiating instruction fees. As a consequence of the failure to cooperate in the conferencing inter parties by Counsels outside court, all the three Counsels for the Defendants were frustrated in their efforts.

Adjudication under Order 21 rule 4 of the Civil Procedure Rules is ordinarily a determination of the issues in controversy. Order 21 rule 4 provides as follows:

"Judgments in defended suits shall contain a concise statement of the case, the points for determination, the decision on the case and the reasons for the decision."

Rule 5 provides further that:

"In suits in which issues have been framed, the court shall state its findings or decision with the reasons for the findings or decision upon each separate issue, unless the findings upon any one or more of the issues is sufficient for the decision of the suit."

Issues are based on material propositions of fact or law affirmed by one party and denied by the other party as defined by Order 15 rule 1 (1) of the Civil Procedure Rules. Section 7 of the Civil Procedure Act deals with adjudication of issues that arise where one party asserts something and the opposite party denies it even if the adjudication results in a dismissal.

Last but not least the question is whether the dismissal is on the merits. In the case of Isaac Bob Busulwa v. Ibrahim Kakinda [1979] HCB 179, Justice Kantinti held on whether a suit is  barred by res judicata, that the dismissal of a suit on a preliminary point, not based on the merits of the case, does not bar a subsequent suit on the same facts and issues between the same parties. In Frederick Sekyaya Sebugulu vs. Daniel Katunda [1979] HCB 46 the Plaintiff’s Counsel sought an adjournment because the Plaintiff was sick in Nairobi. The application for adjournment was refused and the Hon Judge dismissed the suit. Thereafter the Plaintiff moved under order 9 rules 24 and orders 9 rules 26 of the Civil Procedure Rules to set aside the order of dismissal of the suit and it was held that the dismissal could not be treated as res judicata because it was an order in the same case and not an order in a former suit, a necessary condition for application of the principle of res judicata.

Order 9 rule 19 (2) permits a Plaintiff whose plaint has been dismissed for failure to serve summons and who fails to apply for a fresh summons within a year, to file a fresh suit subject to the law of limitation. The dismissal does not operate as a bar to the bringing of a fresh suit. I do not see a difference in the quality of the dismissal under rule 7 of the Constitution (Commercial Court) (Practice) Directions from cases in which a suit is dismissed for nonappearance of a Plaintiff. In this particular dismissal, the Plaintiff’s Counsel represented to court that he had not finalised the question of instructions with his client and that he was in the finals stages of negotiating for their fees. The court held that the suit had been prematurely filed. In other words the Plaintiff was not ready to commence the action and the same when it was dismissed, could not operate as a bar to a subsequent suit.”

I have nothing to add to the above decision other than that in this case the suit had not even been scheduled for hearing in terms of rule 6 (4) of the Constitution (Commercial Court) (Practice) Directions. In the above decision the court held that the Respondent had been awarded costs, which was sufficient compensation for having the suit dismissed against the Defendant. Considering the effect of reinstatement under the inherent powers of the court and the fact that a dismissal under rule 7 of the Constitution (Commercial Court) (Practice) Directions is not a decision on the merits and the matter is not res judicata, the Plaintiff has an option whether to file a fresh suit or apply for reinstatement of the suit. Furthermore under rule 5 (1) of the Constitution (Commercial Court) (Practice) Directions, the rules of the High Court are applicable to the commercial court with the necessary modifications introduced by the Constitution (Commercial Court) (Practice) Directions. I therefore do not agree that an Applicant cannot move under the Civil Procedure Rules whenever appropriate. In the premises the preliminary objection on the competence of the Applicant’s application is overruled.

As far as the merits of the application are concerned I have duly considered the arguments on both sides and I agree with the Applicant that it would be unjust to cut out the Applicant who seems to be strongly pursuing its suit. The dismissal of this suit was made with costs to the Defendant/Respondent. Therefore the costs occasioned by previous proceedings were awarded to the Respondent. If the suit is reinstated, the Respondent will not be prejudiced because it got costs occasioned by the suit until the time when it was dismissed.

In the case of Andrew Bamanya vs. Shamsherali Zaver Civil Application Number 70 of 2001, the Supreme Court held that the mistakes, faults/lapses or dilatory conduct of Counsel should not be visited on the litigant. Furthermore they held on the issue of principles for extension of time to file an appeal that the administration of justice requires that the substance of disputes should be heard and decided on merit. In that case the Applicant’s Counsel had caused a delay of 2 ½ years to file the application for leave to appeal out of time but the court held that it would be a denial of justice considering the circumstances of the case to shut the Applicant out from exercising his rights. Lastly the Supreme Court has inherent jurisdiction to see to it that justice if administered.

In this particular case I am satisfied that the Plaintiff’s lawyers were at fault first of all by not turning up on the date scheduled by the court for holding a meeting in order to comply with the provisions of Order 12 rule 1 of the Civil Procedure Rules and come up with a joint scheduling memorandum. Secondly because of their absence, there was no joint scheduling memorandum filed prior to the date fixed by the court for holding a scheduling conference. Thirdly the suit was filed in Court in April 2012 and the proceedings complained about occurred on the 8th of May 2014. It is not very material that the Applicant itself did not turn up for the meeting which had been scheduled for holding prior to the scheduled date for appearance in court and for conducting the scheduling conference. What is crucial is that Counsel who knows the issues should be present to work out the points of agreement and disagreement so that the controversies are narrowed down and put in a memorandum and the suit set for trial if necessary. Where one Counsel is not available another Counsel can be briefed to attend the meeting. The meeting was scheduled when the parties appeared in court on 26 March 2014 for holding on 14 April 2014 at 2:30 PM in the Chambers of Counsel John Fisher Kanyemibwa. Counsel Roscoe Yiga appeared for the Plaintiff at the hearing. Subsequently when the matter came for a joint scheduling conference on the 8th of May 2014 the Plaintiff’s Counsel was absent. Apart from the date having been fixed in his presence and after consulting their dairies, the excuse that he had missed recording the correct date is a lame excuse. I agree with the Respondent's submission that the cause lists for weekly hearings of the commercial court division are not only sent to all Counsel but also published in the judiciary website. It is the duty of Counsel to peruse the cause lists which is sent every Friday to ensure that their cases are not unattended to and to plan for the week. This is a case involving colossal sums of money. I also agreed that they ought to have been more vigilant and ought not to have wasted the time of court and the other parties by their absence. That notwithstanding I do not agree with the Respondent that the mistakes or negligence of the Plaintiff’s Counsel should be visited on the client. What can be visited on the clients are the costs occasioned by the negligence.

In this case the ends of justice would be furthered by reinstating the suit and hearing it on the merits other than by dismissing it. In the premises the dismissal of this suit will be set aside but the order for costs shall not be set aside. Costs occasioned up to the date of dismissal of this suit remain as awarded to the Respondent. In any case the dismissal was not on the merits. Secondly this application succeeds with costs awarded to the Respondent. The Plaintiff’s suit is accordingly reinstated.

Ruling delivered in open court this 8^th day of September 2014

Christopher Madrama Izama

Judge

Ruling delivered in the presence of:

Roscoe Yiga for the Applicant in court

Pope Ahimbisibwe for the First Respondent

Charles Okuni: Court Clerk

Christopher Madrama Izama

Judge

8/09/2014